The Ultimate SEO KPI: Return On Rank

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I’m not introducing anything new or novel by saying that SEO “rank reports” are unimportant. That sentiment has existed for years among many SEOs, even before Bruce Clay’s famous “Ranking is Dead” presentation at PubCon in late 2008. What was once the key litmus test for success in SEO has now been made obsolete by a decidedly more advanced and personalized set of search results. What engines return to users as they search is often unique to them, based on geographic location, historic search behaviors, and social connections. To now say that any site ranks #1 on Google for a given query is meaningless.

Even before rank reporting lost its mojo, one could argue that search engine rank reports were misguided key performance indicators (KPIs). Ranking highly for an arbitrary set of keywords is not an online business objective in and of itself; the resultant click and conversion activity is what is most important. That fact seems to have been lost on many SEOs who continue to high-five over rank improvements.

The fact that rank reports still exist, and are a way of life for many SEOs, is due to three factors:

1)    The intangible nature of SEO (that is, you can’t hold it in your hands like a print ad) -- so the rank report has functioned as a support crutch for SEOs to prove their worth.

2)    The way that many SEOs sell services is flawed. It’s a service that is often described as moving a website higher in search results for competitive keyword queries. Traffic and conversions are identified more as side effects.

3)    It’s the best, most succinct source of proof available. No legitimate alternative has presented itself; looking deeply at individual organic search clicks and conversions can be tedious and time-consuming.

A way to address each of these factors would be to look at metrics in a more strategic way. A measure is needed to both replace the rank report, while enabling SEOs to understand the quantitative impact of their efforts.

How about a new KPI: return on rank?

Similar to KPIs return on investment (ROI) and return on ad spend (ROAS), used to quantify returns from SEM campaigns, return on rank would help SEOs quantify the return from their efforts and enable them to prioritize future rounds of optimization.

What is Return on Rank, and how would it work?

The million-dollar question, and one I’ve been dabbling with for a couple years, is how would this be calculated. Revenue generated from organic search is easy enough to capture. It’s the investment that’s a bit trickier to calculate, as it’s not as straightforward as the out-of-pocket paid media component that accompanies SEM campaigns.

We’ve begun working in earnest on this KPI in recent months, and think we have it nearly there. Essentially, there are both macro- and micro-level units of measure involved. At the macro-level, ROR identifies the revenue generated via organic search referrals relative to the quantified effort expended (human capital + technology investments).

On a more micro-level, if you could determine rank at the time of the click for individual keyword queries and connect resultant revenue, then you could begin to model the delta in revenue generated by keyword position. This could be by keyword or by similar keyword groupings (i.e. treat “red shoes” and “big red shoes” as identical terms). Over time, we believe this could become a powerful predictive model, too -- one that would enable SEOs to quantify how improvements in average keyword position would impact the bottom line.

It becomes a bit more complex though, when factoring in other realities of SEO:

• The impact of SEO will typically be evident for many months (years even) after the work is performed. In situations where a big SEO project is performed without any subsequent refinements, we can still expect month-over-month gains in ROSR (return on search rank). This is very different from the world of SEM, where the out-of-pocket investment is needed to generate returns.
• That said, given the real-time nature of today’s Web (as evidenced by Google’s QDF algorithm, social signals, etc.), we should expect results to wane over time as content becomes stale. Consistently placing time-based restrictions on a ROSR calculation would allow for a more consistent assessment of program impact. For SEOs who are constantly noodling over their sites, or introducing new content, a cohort approach may be best (e.g., group all August efforts as one cohort).
• Accounting for Google’s “not provided” organic keyword referrals for authenticated users.
• Recognizing that organic search referrals would be present, even in the absence of SEO.

So while we’re working on many of the finer details, the underlying concept is that this measure would help SEOs break free from rank reports – and provide a more appropriate way to calculate the value of SEO. With enough observations over time, this can become both a legitimate SEO ROI calculation and a smart predictive analytics data point.

Thoughts are welcome on this topic. Is this a needed KPI? Is anything missing that needs to be incorporated?

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1 comment on "The Ultimate SEO KPI: Return On Rank".

1. Reg Charie from DotCom-Productions
   

   commented on: August 20, 2012 at 5:21 p.m.
   I really do not see how it is difficult to track if you are using the correct metrics. Time spent building optimization for target phrase + time spent doing off page work for the same phrase + the cost of SEO related services/software based on a cost per keyword phrase. ROI is cumulative and weekly/monthly volumes/conversions should be monitored closely. Landing pages should tell you of the success of phrases. Conversions the success of layout, content, and calls to action. Month over month gains are usually seen with added content. Google's first results for a site are a finished scan. No improvements over time will be seen unless changes/additions are made. ->we should expect results to wane over time as content becomes stale. this depends on several factors. Is the topic a time sensitive one? If not, then the page should hold rank unless a better presented page should be introduced. To account for "Google’s “not provided” organic keyword" phrases, use another metrics system other than GA. AWstats works well in this regard and often comes in the hosting package. ->"Recognizing that organic search referrals would be present, even in the absence of SEO." REALLY? Could you rephrase this to "Recognizing that organic search referrals might not be present, with the absence of SEO." How much traffic are you going to get from a page 5 search result? best, Reg

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